Uralkali Lowers Potash Price for India in One-Year Contract

OAO Uralkali (URKA), the world’s largest
potash producer by output, agreed to supply the soil nutrient to
India at a price that’s 25 percent lower than a year ago.

Indian Potash Ltd. will pay $322 a metric ton for supplies,
Managing Director P.S. Gahlaut said by phone today. Uralkali
will ship 800,000 tons to India by the end of March 2015, the
Russian company said in a statement confirming the price.

Belarusian Potash Co., the trader that Uralkali owned
jointly at the time with Belaruskali, agreed to sell 1 million
tons to India on behalf of both owners at $427 a ton in February
2013. India paid at an average price of $369 a ton from
September, after the Belarusian trading venture collapsed,
according to Uralkali’s data.

“The deal means Uralkali won larger volumes this year
compared with last season, which may diminish Belaruskali’s
ability to sell into the Indian market,” Elena Sakhnova, an
analyst at VTB Capital in Moscow, said by phone today. Demand in
India will be slightly higher than last year, she said.

Potash prices fell after Uralkali roiled markets at the end
of July last year by withdrawing from the trading venture, which
controlled 40 percent of global exports. Uralkali accused its
Belarusian partner of selling potash outside their marketing
agreement and moved to increase its own production.

China Price

Uralkali signed a first-half supply accord with China in
January for $305 a ton. Berezniki, Russia-based Uralkali charged
China $400 when it was marketing potash with Belarus.

India cut a potash subsidy to 9,400 rupees ($157) a ton for
the year beginning in April to lift local prices and reduce
demand, Reuters said last week, citing unidentified government
and industry officials. The country may import as much as 3.7
million tons of potash this agricultural season, up from 3.27
million tons a year before, according to Gahlaut.

Fertecon Ltd., a U.K. researcher, forecast the price for
the Indian deal at $325 to $330 a ton. The final price of the
deal seems reasonable as it has a “quite traditional” premium
of 5 percent to what China pays, VTB Capital’s Sakhnova said.